TY - JOUR
AU - Ameriks,John
AU - Caplin,Andrew
AU - Leahy,John
TI - Retirement Consumption: Insights from a Survey
JF - National Bureau of Economic Research Working Paper Series
VL - No. 8735
PY - 2002
Y2 - January 2002
DO - 10.3386/w8735
UR - http://www.nber.org/papers/w8735
L1 - http://www.nber.org/papers/w8735.pdf
N1 - Author contact info:
John Ameriks
The Vanguard Group, Inc.
PO Box 2600, MS V36
Valley Forge PA 19482
Tel: 610-503-5676
Fax: 610-503-5690
E-Mail: john_ameriks@vanguard.com
Andrew Caplin
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY 10012
Tel: 212/998-8950
Fax: 212/995-3932
E-Mail: andrew.caplin@nyu.edu
John V. Leahy
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY 10012
Tel: 212/992-9770
E-Mail: john.leahy@nyu.edu
AB - Prior research has established that consumption falls significantly at retirement. What is not known is the extent to which this fall is anticipated during the working years. Do working households expect such a large fall in consumption upon retirement, or are they taken by surprise? Using data from a new survey, we show that many working households do expect a considerable fall in consumption when they retire. In fact, those who are already retired report significantly smaller falls in consumption than are expected by those who are still working. We show that participation in the stock market plays a dominant role in explaining the gap between expectations and outcomes, indicating that much of the gap is a result of unexpected stock market appreciation. The survey produces new insights into the high level of uncertainty in the period leading up to retirement, and the surprises that may lie in store when households actually retire.
ER -